ECONOMY

EU subsidies to dig up vineyards vary by region

MAINZ, Germany – EU winemakers will get cash rewards to dig up their vines that will vary according to region and local economic conditions, part of a plan to drain Europe’s surplus wine lakes, the EU’s farm chief said. Under a five-year scheme to begin in August 2008, winemakers would be encouraged to produce less by abandoning some of their vines – and get generous subsidies to do so, although the cash amounts offered would fall gradually in each year of the scheme. This scheme would remove some 200,000 hectares of land under vines out of the EU’s existing 3.4 million hectares, as farmers dig up, or «grub up,» some or all of their vineyards. According to a draft reform plan authored by EU Agriculture Commissioner Mariann Fischer Boel, the area to be removed would start at 60,000 hectares in the first year of the reform and then fall each year. EU wine production, in theory, would fall. «The premium (cash subsidy) will be calculated according to the region and we don’t have a flat-rate grubbing up premium – it’s simply adapted to the different areas,» she said. «If you grub up in an area where the wine price is very low, then we don’t pay the high grubbing up (premium). There’s a link between the yield, the price and what you get in grubbing up.» Speaking to reporters on the margins of an informal meeting of EU farm ministers, Fischer Boel said her proposed premiums would vary within a set range for each year of the reform and confirmed that the range would fall in each year of the reform. Internal Commission documents circulating in Brussels last week showed that in the first year, producers would get an average -7,000 for each hectare that they dig up. The EU is the world’s largest producer, consumer, exporter and importer of wine. In recent years it has lost part of its traditional export markets to cheaper wines from Australia, Chile and also the US, and seen a surge in imports. Apart from fending off competition from New World wines by focusing more on quality than quantity, Fischer Boel’s idea is to divert subsidies to discourage large unwanted surpluses that usually end up being turned into industrial alcohol or biofuel. By abolishing crisis distillation, an emergency subsidy used to correct market imbalances and a huge drawer on the EU wine budget of some -1.3 billion a year, the theory is that more cash would become available to pay farmers to dig up vines. «It is a voluntary system and it’s for the wine producers themselves to decide whether they want to join it,» Fischer Boel said. «But if they don’t, then they continue at their own risk because the possibilities to distill will be gone.»